Monday, August 19, 2013

Opening Grain Market Comments

Markets are called firmer this morning behind a firmer overnight session lead by short covering and weather forecasts.

In the overnight session corn was up 10 cents, KC wheat was up 5, MPLS wheat was up 6, CBOT wheat was up 6, and soybeans were up 20-22 cents.  At 8:15 outside markets have the US dollar about unchanged, DOW futures are about unchanged, gold is about unchanged, and crude oil is down 50-60 cents a barrel.

Last night our markets started higher last night on weather forecasts that are dry and warm for some areas.  The heat is needed in some areas; but hot and dry as beans are finishing up isn’t exactly the best for yields.  I have also seen plenty of concern that the top end of corn yields is getting took off.  Here is CHS Hedging Weather info from this a.m.

Other then weather it seems to be about the funds.  The big headline for the funds is they have plenty of room to buy; overall they still have a big short in corn and wheat.  Here is CHS Hedging CFTC Recap

As for news this week we should find plenty.   Weather forecasts will continue to changing and we will have the normal export shipments and crop progress/condition report today.  Later in the week export sales and ethanol numbers.  But we will also have the Pro Farmer Crop Tour and with how info flows now days this could really help make our market more volatile.  The best way I know how to follow is twitter; use hash tag #pftour13.

Here is one of the tweets I seen this a.m.

After 5 stops in SD, corn avg 158 bpa compared to 3 yr avg of 119.6 bpa. Avg Pod counts much lower 776 v 984.6 #pftour13

With the late developing crops many are thinking that the POD counts for beans will be low.  The bean crop being behind is also the reason why many are view the recent weather forecast as much more bullish for soybeans then for corn.

As for marketing I think we need to keep in mind that unless we really see things get bad and get worse very fast we still likely have a burdensome fundamental situation.  We are still looking at a corn carryout more than two times the present carryout. 

As for the soybean fundamental situation a drop in yield quickly cuts the carryout there; but keep in mind many feel that demand might be overstated.  China imports in particular. 

For example purposes let’s say our corn yield loses 5 bushels an acre.  That’s roughly 440 million bushels.  If we lose any demand at all; which based on the last USDA report how the USDA curved demand as supply fell; you have to assume happens.  We still have roughly a carryout still 2 times the present carryout.  Could corn yield lose more than 5 bushels an acre?  Sure; but keep in mind that last week most thought the USDA yield was light; many in the industry are still thinking yield could get closer to 160.  Bottom line is until this big headline changes we have to be cautious of the funds.

We need to get the funds to want to get long, we don’t want to simply see them cover some shorts here and there.  We need a headline were they decide to support our prices.  I don’t know that we have that today.  I think we are going the right direction; but I am in the mindset that if one is under sold or under hedged that making some catch up sales on bounces wouldn’t be the worst idea in the world.  Now if I already have done a good job making sales then some patience is warranted depending on situations.

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